BORDER Timbers Limited (BTL) has entered into a sale agreement with local indigenous entity Sure Seal Investments for the disposal of the company’s 100% equity interest in Border Timbers International (BTI).
VICTORIA MTOMBA BUSINESS REPORTER
Sure seal Investments (Pvt) Ltd is a company registered in Zimbabwe.
The transaction has resulted in BTL incurring a loss for the financial year ending June 30 2014 due to the write-off of intercompany receivable from BTI for timber purchased from BTL over the years.
“The intercompany payable in BTI funded the accumulated losses in BTI amounting to $4 470 675 which had already been included in the audited financial statements of the company for the year ended June 30 2014,” the company said.
The company said before the transaction BTI was owned by BTL and upon the completion of the transaction BTI ceased to be a subsidiary of the company.
“The purchase price consideration was for a nominal amount of $1. The movable assets used by BTI are all owned and accounted in the books of BTL, and have now been leased by BTL to BTI under a lease agreement with an exercisable option to purchase them once fully depreciated at us $1 value during the nine-year lease period,” the company said.
The company assets that included furniture and fittings, motor vehicles and forklifts, office equipment, plant and machinery and power supplies has a net book amount of $928 549 as at April 25 2014.
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BTI was disposed off because its operations were not profitable and directors saw it fit to dispose it off.
“The board of directors assessed the financial performance of BTI and its contribution to the group and concluded that there were no alternative strategies that could be implemented for BTI to achieve profitability through improvements in operating, efficiencies other than to divest out of the business run by BTI,” the company said.
The group said the move should have a positive impact on the performance of the company and should allow the company to improve on its core line of business of forestry and milling.
The company said it has stands 2528 and 1959 Mutare for a fixed term of five years subject to a one-year renewal period and the rent charged will be based on rates per metre square which vary over the years.
“The total lease payments payable by the lessee period over the nine year period for the equipment amount to $540 000.
